The Sunday Times has quietly banned its reporters from employing subterfuge in the pursuit of stories, sources on the paper have told MediaGuardian.co.uk.

The ban is understood is understood to have "come from the very top" of News International according to insiders and to have been ordered in the past month following the outcry over revelations that the phone of murdered schoolgirl Milly Dowler was hacked and messages deleted [see footnote].

As a result, it is understood that the paper's editor, John Witherow, told his reporting staff not to use pseudonyms or alter egos despite the fact that such practices are allowed under law and in the Press Complaints Commission editors' code of practice for stories that are in the public interest. "We have been forced to do it," a source said.

The Sunday Times was dragged into the row over newspaper ethics when it was revealed that in January 2000 it employed the services of a conman named Barry Beardall to pretend he was engaged in a conveyancing job to trick staff at solicitors Allen & Overy into handing over information about the sale price of Gordon Brown's flat.

Stings have helped the paper to some of their best exclusives over the past few years, as Witherow disclosed in a piece written for the paper last month. At the time, he defended the use of subterfuge and even "blagging" when pursuing stories in the public interest, citing Jon Swain's revelations's about the Libyan government's support for miners' union the NUM in 1984.

The editor wrote: "No two investigations are ever the same, but Swain's story bore certain hallmarks. To get to the truth he had to lie and deceive. He had to access confidential information by blagging: by pretending to be someone else and extracting the details from a hapless victim. If he had not done so, the story might never have appeared and the public would have been none the wiser. In other words, the ends justified the means."

Other scoops include its disclosures last October about alleged bribery among Fifa officials in the runup to the decision over the hosting of the 2018 and 2022 World Cups. The paper's Insight team – led by Jonathan Calvert and his colleague Claire Newell — obtained a series of revelations by posing as American lobbyists and prompting a series of officials to allegedly offer up their votes for sale.

Calvert and Newell used similar undercover tactics to expose a group of MPs who were touting for paid consultancy work when they left parliament just prior to the May 2010 general election. The sting caught former transport secretary Stephen Byers saying that he was "like a cab for hire" and would ask for up to £5,000 a day to provide advisory services to companies.

Clause 10.2 of the Press Complaints Commission's code of practice demonstrations that clandestine operations or the use of deception can be legitimate. It states: "Engaging in misrepresentation or subterfuge, including by agents or intermediaries, can generally be justified only in the public interest and then only when the material cannot be obtained by other means."

Those close to the newspaper believe that the new ban is understood to make the employment of News of the World reporter Mazher Mahmood less likely. Mahmood — famous for his stings posing as the "fake sheikh" — is understood to have visited the offices of the Sunday Times two weeks ago where he was interviewed by the paper's managing editor of news, Charles Hymas.

Internal sources have said that the ban makes Mahmood's hiring "almost impossible". "Without stings Mazher Mahmood is nothing," said a source. Another source on the paper said that if he were hired he would not be working for the paper's Insight team.

However a number of sources say that Mahmood's methods would be unlikely to find a fit at the paper and that he might also prove too expensive. It is thought that budget cuts are expected later this year and that Mahmood's terms may be too much. "It's not just the large six-figure salary, it's his support staff and bodyguards. We just couldn't afford him," said a senior source.

Another source added: "They have interviewed Mazher Mahmood but they are desperate to move away from anything to do with the News of the World."

A News Corporation spokesman declined to comment on the claims. When asked to deny the existence of a subterfuge ban, the spokeswoman's only comment was that the company's reporters "always work within the PCC code of conduct".

• The following was published on 12 December 2011 in the corrections and clarifications column: An article about the investigation into the abduction and death of Milly Dowler (News of the World hacked Milly Dowler's phone during police hunt, 5 July, page 1) stated that voicemail "messages were deleted by [NoW] journalists in the first few days after Milly's disappearance in order to free up space for more messages. As a result friends and relatives of Milly concluded wrongly that she might still be alive." Since this story was published new evidence – as reported in the Guardian of 10 December – has led the Metropolitan police to believe that this was unlikely to have been correct and that while the News of the World hacked Milly Dowler's phone the newspaper is unlikely to have been responsible for the deletion of a set of voicemails from the phone that caused her parents to have false hopes that she was alive, according to a Metropolitan police statement made to the Leveson inquiry on 12 December.

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